Q3 2016 production results

RNS Number : 7960M

Polymetal International PLC

18 October 2016

 

Release time	IMMEDIATE
Date	18 October 2016

Polymetal International plc

Q3 2016 production results

Polymetal International plc (LSE, MOEX: POLY; ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's production results for the third quarter and nine months ended September 30, 2016.

HIGHLIGHTS

·     Polymetal produced 372 Koz of gold equivalent (GE) in Q3 2016, an increase of 29% quarter-on-quarter. The increase in production was driven by seasonal de-stockpiling at Mayskoye, launch of the Svetloye heap leach at Okhotsk operations, and a strong performance at Albazino and Varvara.

·     Year-on-year GE production dropped 5% as grades declined at Dukat and Omolon. Polymetal remains on track to deliver 1.26 Moz gold equivalent production for the year. We also re-iterate the cost guidance for the full year: TCC of US$ 525-575/GE oz and AISC of US$ 700-750/GE oz.

·     Polymetal generated significant free cash flow in the third quarter. Net debt remained essentially unchanged at US$ 1,469 million after the company paid US$ 38 million of interim dividends and spent US$ 100 million to acquire Komarovskoye.

·     At Kyzyl, construction activities are progressing on schedule. The amended subsoil contract, together with the program of work, received the final approval of the Kazakh government. The project remains on track to produce its first concentrate in Q3 2018.

·     At Svetloye, gold production commenced in August, delivering 15 Koz of gold during the quarter. Svetloye is currently running at 100% of design capacity and is set to become the key driver for sustaining production levels at the Okhotsk hub in the long term.

·     Polymetal regrettably reports a fatal incident at Svetloye on 8th October 2016. The Company will continue to implement additional measures to reinforce safety risk management procedures in order to fully eliminate fatalities at all of its operations.

·     Polymetal reconfirms its production guidance for 2017 at 1.4 Moz of GE and for 2018 at 1.55 Moz of GE.

·     Polymetal will be hosting an Analyst and Investor Day on November 14 in London to provide an update on key development projects.

"We remain firmly on track to meet our annual production and cost guidance. The commissioning of Svetloye, acquisition of Komar and successful integration of Kapan, are important milestones in our medium-term growth plans", said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. "As originally expected, we delivered solid free cash flow for the quarter and remain strongly committed to shareholder returns."  

	3 months ended Sep 30,		% change1	9 months ended Sep 30,		% change1
	2016	2015		2016	2015
Waste mined, Mt	23.9	17.2	+39%	58.2	50.0	+16%
Underground development, km	24.6	18.1	+36%	68.3	54.0	+26%
Ore mined, Kt	3,462	3,116	+11%	9,194	9,124	+1%
Open-pit	2,405	2,360	+2%	6,448	6,855	-6%
Underground	1,057	755	+40%	2,746	2,269	+21%
Ore processed, Kt	3,306	2,852	+16%	8,593	8,289	+4%
Production
Gold, Koz	268	270	-1%	606	642	-6%
Silver, Moz	8.0	9.3	-14%	22.2	24.9	-11%
Copper, tonnes	311	670	-54%	1,266	808	+57%
Gold equivalent, Koz2	372	390	-5%	894	957	-7%
Sales
Gold, Koz	242	261	-7%	561	614	-9%
Silver, Moz	8.3	8.4	-2%	21.3	22.4	-5%
Copper, kt	0.3	-	NA	0.5	0.7	-36%
Zinc, kt	1.4	-	NA	1.5	-	NA
Revenue, US$m3	466	402	+16%	1,059	1,050	+1%
Net debt, US$m4	1,469	1,435	+2%	1,469	1,298	+13%
Safety5
Fatalities	-	2	-100%	2	5	-60%
LTIFR	0.19	0.19	-	0.18	0.21	-14%
Notes:     (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all tables in this release.                 (2) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.                 (3) Calculated based on the unaudited consolidated management accounts. Concentrate sales are recorded based on forward prices for the expected dates of final settlement and concentrate revenue is presented net of refining and treatment charges. (4) Non-IFRS measure based on unaudited consolidated management accounts. Net debt equals to current and non-current borrowings less cash and cash equivalents and includes the liability for dividend payable. Comparative information is presented for 30 June 2016 (for the three months period) and 31 December 2015 (for the nine months period).                 (5) LTIFR =lost time injury frequency rate per 200,000 hours worked.                 (6) NA = not available, NM - not material

PRODUCTION BY MINE

	3 months ended Sep 30,		% change1	9 months ended Sep 30,		% change1
	2016	2015		2016	2015
GOLD EQ. (KOZ) 2
Dukat	93	108	-14%	280	297	-6%
Albazino-Amursk	72	64	+13%	190	173	+10%
Mayskoye	47	71	-34%	68	91	-25%
Omolon	41	60	-32%	108	155	-30%
Voro	36	34	+7%	93	105	-11%
Varvara	22	20	+5%	57	58	-2%
Okhotsk	49	33	+49%	79	77	+2%
Kapan	12	-	NA	18	-	NA
TOTAL	372	390	-5%	894	957	-7%

Notes:     (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all tables in this release.

                (2) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Tuesday, 18 October, 16:00 Moscow time (14:00 London time).

To participate in the call, please dial:

8 10 800 204 140 11 access code 95884697# (free from Russia), or

[phone] (free from the UK), or

[phone] (free from the US), or

Any of the above numbers (from outside the UK, the US and Russia) or follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4019

Please be prepared to introduce yourself to the moderator or register.

Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4019. A recording of the call will be available immediately after the call at [phone] (from within the UK), [phone] (from within the US) and [phone] (from within Russia), access code 304009#, from 16:30 Moscow time Tuesday, October 18   , till 16:30 Moscow time Tuesday, October 25, 2016.

Enquiries

Media		Investor Relations
FTI Consulting Leonid Fink Jenny Payne	[phone]	Polymetal Maxim Nazimok Evgenia Onuschenko Maryana Nesis	[e-mail] [phone] (Russia) [phone] (UK)
Joint Corporate Brokers
Morgan Stanley Sam McLennan Richard Brown	[phone]	RBC Europe Limited Tristan Lovegrove Marcus Jackson	[phone]

FORWARD-LOOKING STATEMENTS

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED

DUKAT OPERATIONS

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING
Dukat
Underground development, m	8,928	8,218	+9%	26,514	26,248	+1%
Ore mined (underground), Kt	409	434	-6%	1,211	1,228	-1%
Goltsovoye
Underground development, m	1,449	1,996	-27%	4,712	5,615	-16%
Ore mined (underground), Kt	48	40	+21%	141	151	-7%
Lunnoye + Arylakh
Underground development, m	1,407	1,478	-5%	3,952	4,188	-6%
Ore mined (underground), Kt	104	106	-3%	314	293	+7%
PROCESSING
Dukat
Ore processed, Kt	474	484	-2%	1,458	1,363	+7%
Head grades
Gold, g/t	0.7	0.7	-3%	0.6	0.6	-7%
Silver, g/t	386	477	-19%	374	467	-20%
Recovery1
Gold	87.1%	84.2%	+3%	86.3%	84.4%	+2%
Silver	85.6%	86.4%	-1%	85.2%	85.8%	-1%
Production
Gold, Koz	9.2	9.3	-2%	23.9	23.1	+4%
Silver, Moz	4.9	6.3	-22%	14.8	17.0	-13%
Lunnoye
Ore processed, Kt	107	101	+6%	325	311	+4%
Head grades
Gold, g/t	1.4	1.4	+2%	1.5	1.5	+3%
Silver, g/t	465	418	+11%	463	426	+9%
Recovery1
Gold	91.9%	92.3%	-0%	92.4%	90.7%	+2%
Silver	91.0%	89.7%	+1%	92.0%	88.9%	+3%
Production
Gold, Koz	4.5	4.4	+2%	15.2	13.9	+9%
Silver, Moz	1.5	1.2	+17%	4.5	3.8	+17%
TOTAL PRODUCTION
Gold, Koz	13.6	13.7	-0%	39.1	37.0	+6%
Silver, Moz	6.4	7.6	-16%	19.3	20.8	-7%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory (concentrate, precipitate)

Year-on-year silver production fell by 16%, driven mostly by a normalisation of the grade profile at the Dukat underground mine, which produced exceptionally high grades last year. The Dukat concentrator continues to operate significantly above nameplate throughput capacity, with additional tonnage sourced from historic low-grade stockpiles.

At Lunnoye, both grades and ore volumes mined were higher y-o-y and q-o-q, leading to a 17% increase in silver production for the quarter.

ALBAZINO-AMURSK

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING
Waste mined, Kt	5,226	4,576	+14%	13,845	12,715	+9%
Underground development, m	1,447	1,310	+10%	4,379	3,514	+25%
Ore mined, Kt	482	389	+24%	1,367	1,119	+22%
Open-pit	409	389	+5%	1,163	1,119	+4%
Underground	72	-	NA	205	-	NA
PROCESSING
Albazino concentrator
Ore processed, Kt	409	388	+5%	1,239	1,191	+4%
Gold head grade, g/t	5.1	5.5	-7%	5.1	5.3	-4%
Gold recovery1	88.0%	86.0%	+2%	87.0%	87.4%	-0%
Concentrate produced, Kt	34.2	34.7	-1%	102.8	100.3	+2%
Concentrate gold grade, g/t	53.6	52.6	+2%	53.2	54.8	-3%
Gold in concentrate, Koz2	58.9	58.6	+1%	175.8	176.8	-1%
Amursk POX
Concentrate processed, Kt	43.9	41.9	+5%	117.1	115.4	+1%
Gold head grade, g/t	53.3	55.3	-4%	52.1	52.6	-1%
Recovery	94.1%	94.0%	+0%	94.1%	94.1%	+0%
Gold produced, Koz	71.9	63.8	+13%	189.9	173.4	+10%
TOTAL PRODUCTION
Gold, Koz	71.9	63.8	+13%	189.9	173.4	+10%

Notes:     (1) To concentrate

(2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production upon completion of downstream processing at the Amursk POX

Q3 Albazino/Amursk gold production was up 13% year-on-year. Quarterly throughput at the POX plant increased by 5% year-on-year. The decline in grades at Albazino was more than compensated for by increased throughput and better recoveries at the concentrator.

Albazino underground mine productivity and dilution control continued to improve. Careful geotechnical management of ground conditions remains essential for further improvement in productivity and grades.

The POX debottlenecking project has been approved by the board of directors. The capacity of the POX facility is expected to increase by approximately 50% in terms of concentrate processed. The key additions to the equipment will comprise a second oxygen plant, an autoclave discharge thickener, press filters for thickener underflow and upgrades to heat recovery and water treatment sections.

The increase in POX capacity will enable Polymetal to retain approximately 50% of Kyzyl concentrate for in-house treatment as opposed to a 3rd party off-take and is expected to improve effective gold recovery from concentrate, as well as bring down processing and transportation costs. Polymetal plans to ramp up the debottlenecked POX plant to full expanded capacity in the second half of 2018, in time to take first feed from the Kyzyl concentrator.  

MAYSKOYE

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING
Underground development, m	4,800	3,446	+39%	14,832	9,440	+57%
Ore mined (underground), Kt	213	152	+40%	502	519	-3%
PROCESSING
Mayskoye concentrator
Ore processed, Kt	214	197	+9%	541	634	-15%
Gold head grade, g/t	5.1	5.3	-5%	5.4	6.8	-21%
Gold recovery1	87.1%	83.2%	+5%	87.6%	86.0%	+2%
Concentrate produced, Kt	18.7	17.6	+6%	51.6	63.0	-18%
Concentrate gold grade, g/t	50.5	49.1	+3%	49.8	58.8	-15%
Gold in concentrate, Koz2	30.3	27.8	+9%	82.6	119.2	-31%
Concentrate sold, Kt	29.7	29.7	-0%	29.7	29.7	-0%
Payable gold in concentrate sold, Koz	43.2	59.6	-28%	43.2	59.6	-28%
Amursk POX
Concentrate processed, Kt	2.0	4.1	-50%	13.7	16.8	-19%
Gold head grade, g/t	51.9	59.4	-12%	54.8	58.4	-6%
Recovery	94.0%	94.0%	+0%	94.1%	94.1%	+0%
Gold produced, Koz	4.1	11.5	-64%	25.0	31.8	-21%
TOTAL PRODUCTION
Gold, Koz	47.2	71.1	-34%	68.2	91.5	-25%

Notes:     (1) To concentrate

(2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in   total production upon sale to off-taker or internal downstream processing to saleable metal product.

For the 9 months, total gold production at Mayskoye decreased by 25% to 68 Koz year-on-year, mainly influenced by higher levels of dilution that led to grade declines in ore processed. The new mining method is making good progress as the amount of ore mined grew 27% quarter-on-quarter to 213 Kt. The focus is now on achieving rapid backfill to ensure lower dilution from secondary stopes and reduced primary stope length.

OMOLON

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING
Dalneye
Waste mined, Kt	-	-	NA	-	1,042	-100%
Ore mined (open pit), Kt	-	-	NA	-	635	-100%
Tsokol
Waste mined, Kt	-	-	NA	-	396	-100%
Underground development, m	1,022	684	+49%	2,954	785	+276%
Ore mined (open pit), Kt	-	-	NA	-	176	-100%
Ore mined (underground), Kt	41	-	NA	70	-	NA
Birkachan
Waste mined, Kt	792	777	+2%	2,174	1,447	+50%
Underground development, m	869	-	NA	1,574	1,254	+26%
Ore mined (open pit), Kt	230	256	-10%	589	441	+34%
Ore mined (underground), Kt	23	-	NA	27	1	NM
Oroch
Waste mined, Kt	1,178	1,127	+4%	4,085	2,628	+55%
Ore mined (open pit), Kt	282	195	+45%	691	232	+198%
Olcha
Waste mined, Kt	288	-	NA	288	-	NA
Ore mined (open pit), Kt	40	-	NA	40	-	NA
TOTAL HUB
Waste mined, Kt	2,257	1,904	+19%	6,546	5,515	+19%
Underground development, m	1,891	684	+176%	4,528	2,039	+122%
Ore mined, Kt	617	451	+37%	1,417	1,485	-5%
Open-pit	553	451	+23%	1,320	1,484	-11%
Underground	64	-	NA	97	1	NM
PROCESSING
Kubaka Mill
Ore processed, Kt	212	207	+2%	629	622	+1%
Grade
Gold, g/t	4.3	6.3	-31%	4.6	6.1	-24%
Silver, g/t	182	227	-20%	110	184	-40%
Recovery1
Gold	92.5%	94.6%	-2%	90.7%	95.6%	-5%
Silver	91.3%	88.3%	+3%	86.2%	87.4%	-1%
Gold production, Koz	27.4	41.8	-34%	85.7	115.3	-26%
Silver production, Moz	1.1	1.5	-26%	1.8	3.1	-42%
TOTAL PRODUCTION
Gold, Koz	27.4	41.8	-34%	85.7	115.4	-26%
Silver, Moz	1.1	1.5	-26%	1.8	3.1	-42%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory

For the 9 months, gold and silver production at Omolon decreased year-on-year by 26% and 42% respectively, as high-grade ore from Sopka was replaced by Dalneye stockpiles and ore from Oroch.

Open-pit mining at Olcha commenced in August. The objective is to truck approximately 150 Kt of ore to the Kubaka plant in Q1 2017, which should result in higher grades and production levels.

Underground mining at Tsokol and Birkachan has been making good progress with a total increase of 176% year-on-year.  

VORO

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING
Voro
Waste mined, Kt	2,679	2,636	+2%	7,993	7,818	+2%
Ore mined (open pit), Kt	353	506	-30%	986	1,422	-31%
-     primary	237	379	-37%	775	1,086	-29%
-     oxidised	115	127	-9%	211	336	-37%
PROCESSING
Voro Heap Leach
Ore stacked, Kt	232	243	-5%	295	423	-30%
Gold head grade, g/t	1.7	1.9	-10%	1.2	1.8	-32%
Gold production, Koz	6.7	8.3	-19%	12.2	19.2	-36%
Voro CIP
Ore processed, Kt	252	243	+4%	750	698	+8%
Gold head grade, g/t	4.3	4.0	+8%	4.3	4.1	+6%
Gold recovery1	78.3%	79.2%	-1%	78.4%	78.8%	-1%
Gold production, Koz	29.4	25.5	+15%	80.2	84.8	-5%
TOTAL PRODUCTION
Gold, Koz	36.1	33.8	+7%	92.4	104.0	-11%

Note:       (1) Technological recovery, includes gold within work-in-progress inventory  

Quarterly gold production at Voro increased by 7% year-on-year to 36.1 Koz, driven by improved head grades and ore volumes processed at the CIP plant.

VARVARA

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING Varvara
Waste mined, Kt	4,866	8,051	-40%	14,320	22,471	-36%
Ore mined (open pit), Kt	701	1,014	-31%	1,937	2,546	-24%
-     float ore	15	21	-30%	44	118	-63%
-     leach ore	686	992	-31%	1,894	2,428	-22%
Komarovskoye2
Waste mined, Kt	1,109	-	NA	1,109	-	NA
Ore mined (open pit), Kt	65	-	NA	65	-	NA
PROCESSING
Flotation
Ore processed, Kt	1	234	-100%	355	311	+14%
Grade
Gold, g/t	3.6	1.2	+203%	1.3	1.1	+16%
Copper	0.29%	0.39%	-24%	0.33%	0.36%	-8%
Recovery1
Gold	93.1%	48.1%	+94%	70.4%	46.2%	+52%
Copper	72.8%	72.3%	+1%	72.6%	72.2%	+0%
Production
Gold (in concentrate), Koz	0.5	3.3	-87%	7.0	4.1	+71%
Copper (in concentrate), t	20	670	-97%	836	808	+4%
Leaching
Ore processed, Kt	731	594	+23%	1,954	2,265	-14%
Gold head grade, g/t	1.1	0.9	+28%	0.9	0.8	+5%
Gold recovery1	82.1%	76.8%	+7%	78.0%	78.1%	-0%
Gold production (in dore), Koz	21.0	13.7	+53%	45.8	50.0	-8%
Total ore processed, Kt	732	828	-12%	2,310	2,576	-10%
TOTAL PRODUCTION
Gold, Koz	21.4	17.1	+25%	52.8	54.1	-2%
Copper, t	20	670	-97%	836	808	+4%

Note:       (1) Technological recovery, includes gold and copper within work-in-progress inventory

                (2) Since the acquisition date (1 August 2016)

Quarterly Varvara gold production increased 25% year-on-year, mostly driven by improved grades and recovery levels at the leaching circuit.

Meanwhile, open-pit mining at Komarovskoye is ramping up with the first 30 Kt of ore railed to Varvara for processing. Grade levels and ore tonnage are expected to improve once mining catches up with the historic stripping backlog.

OKHOTSK OPERATIONS

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING
Khakanja
Waste mined, Kt	-	529	-100%	-	1,478	-100%
Ore mined (open-pit), Kt	-	104	-100%	-	180	-100%
Ozerny
Underground development, m	-	-	NA	-	42	-100%
Ore mined (underground), Kt	-	-	NA	-	105	-100%
Avlayakan
Underground development, m	1,107	985	+12%	3,438	2,990	+15%
Ore mined (underground), Kt	34	22	+49%	94	78	+21%
Svetloye
Waste mined, Kt	259	-	NA	764	-	NA
Ore mined (open pit), Kt	324	-	NA	976	-	NA
TOTAL HUB
Waste mined, Kt	259	-	NA	764	1,520	-50%
Ore mined, Kt	357	22	NM	1,070	363	+195%
Open-pit	324	-	NA	976	285	+242%
Underground	34	22	+49%	94	78	+21%
PROCESSING
Khakanja
Ore processed, Kt	157	161	-3%	466	471	-1%
Grade
Gold, g/t	6.2	6.0	+5%	3.8	4.6	-18%
Silver, g/t	94	73	+28%	76	84	-10%
Recovery1
Gold	95.8%	94.9%	+1%	95.5%	94.9%	+1%
Silver	82.6%	75.7%	+9%	77.2%	70.0%	+10%
Gold production, Koz	29.2	28.9	+1%	53.2	66.2	-20%
Silver production, Moz	0.4	0.3	+32%	0.9	0.9	-2%
Svetloye Heap Leach
Ore stacked, Kt	401	-	NA	401	-	NA
Gold head grade, g/t	3.7	-	NA	3.7	-	NA
Gold production, Koz	14.7	-	NA	14.7	-	NA
TOTAL PRODUCTION
Gold, Koz	43.9	28.9	+52%	67.9	66.2	+2%
Silver, Moz	0.4	0.3	+32%	0.9	0.9	-2%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate)

Gold and silver production at the Khakanja plant in Q3 2016 increased year-on-year by 1% and 32%, respectively. This is mainly due to higher-grade ore with better metallurgical properties shipped from the Avlayakan mine

At Svetloye, production commenced on 15 August 2016 and is fully in line with the accelerated commissioning schedule. The heap leaching facility is currently running at 100% of its design capacity with all key parameters in line with plan.

KAPAN

	3 months ended Sep 30 (1),		% change	9 months ended Sep 30(1),		% change
	2016	2015		2016	2015
MINING
Kapan
Underground development, m	3,537	-	NA	5,938	-	NA
Ore mined (underground), Kt	112	-	NA	181	-	NA
PROCESSING
Ore processed, Kt	116	-	NA	180	-	NA
Grade
Gold, g/t	2.3	-	NA	2.3	-	NA
Silver, g/t	47		NA	46		NA
Copper, %	0.3%	-	NA	0.3%	-	NA
Zinc, %	1.6%		NA	1.6%		NA
Recovery
Gold	85.8%	-	NA	85.2%	-	NA
Silver	83.8%		NA	83.9%		NA
Copper	91.7%	-	NA	91.9%	-	NA
Zinc	91.4%		NA	91.3%		NA
TOTAL PRODUCTION
Gold, Koz	6.5	-	NA	9.9	-	NA
Silver, Moz	0.1	-	NA	0.2	-	NA
Copper, kt	0.3		NA	0.4		NA
Zinc, kt	1.3	-	NA	2.0	-	NA

Note:       (1) Since the acquisition date (28 April 2016)

At Kapan, integration activities and modifications to operating practices are ongoing and include changes to the motivation system, productivity gap analysis, as well as targeted in-fill drilling. The best practices from other underground operations in Polymetal's portfolio are being implemented by teams comprising local and seconded employees.

In-fill and step-out drilling is underway at Lichkvaz, a satellite deposit that should provide additional tonnage to the existing concentrator.

KYZYL PROJECT

	3 months ended Sep 30,		% change	9 months ended Sep 30,		% change
	2016	2015		2016	2015
MINING
Waste mined, Kt	7,521	-	NA	13,616	-	NA

Open-pit mining (pre-stripping) aimed at removing historic waste stockpiles and the drill-and-blast excavation of fresh rock is running at full capacity and according to plan. Polymetal has signed the updated the subsoil contract and the program of work with Ministry of Industrial Development, which is an important milestone that ensures full compliance with the licensing regime.

Construction activities focused on foundations and structural steel for the processing plant building are progressing on schedule.

HEALTH AND SAFETY

Polymetal regrets to report a fatal incident at the Svetloye mine on 8th October 2016 as a result of a road accident. We are deeply saddened over the loss of our colleague.

Safe operations remain a top priority for Polymetal. We are taking all possible steps to reduce the risk of injuries in our business and are making sure that we provide a safe operating environment for all our employees throughout the Group.  

PERSONNEL

Boris Balykov (39) has been appointed as the Managing Director at Voro.

Mr. Balykov has been with Polymetal since 2011, first joining as the deputy head of the Sopka open pit at Omolon. In January 2012, he moved to Kubaka as the deputy operations manager, and in October 2012 was promoted to operations manager.  Before joining Polymetal, Mr Balykov worked at the Sokolov-Sarbay iron ore mine where he started as an assistant to the excavator operator and then worked as the production department manager, deputy head of the production department and finally, working his way up to Deputy Director. Mr Balykov graduated from the Rudny Industrial Institute as a mining engineer, specializing in open-pit development of mineral deposits.

Mr. Andrey Novikov (45), the previous Managing Director of Voro will now lead the Urals regional management team directing and coordinating all Polymetal's activities in the area including the Voro and Varvara mines.

 

END

 

 

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